* Based on actual AER-reported electricity consumption in the NEM in 2016-17, and assuming 100% reliance on renewables.
For example, from these tables:
- With a 100% RET, if fossil fuel power averages $100/MWh, and renewables generation costs also average $100/MWh, required wind power subsidies, using 2016-17 demand magnitudes, would be nearly $15 billion per annum, and solar subsidies would be nearly $18 billion per annum. See Table 4
- With a 75% RET, if, say, coal power averages $200/MWh, and renewables costs are half that, at $100/MWh, required wind power subsidies, using 2016-17 demand magnitudes, would be almost $4 billion per annum, and solar subsidies would be over $9.7 billion per annum. See Table 3.
- With a 50% RET, if fossil fuel power averages $50/MWh, and renewables generation costs are double that ($100/MWh), wind power subsidies, using 2016-17 demand magnitudes, would be almost $7.3 billion per annum, and solar subsidies would be over $8.8 billion per annum. See Table 2.
- With a 25% RET, if fossil fuel power averages $100/MWh, and renewables generation costs also average $100/MWh, required wind power subsidies, using 2016-17 demand magnitudes, would be around zero, and solar subsidies would be over $2.1 billion per annum. See Table 1.
On 1 June 2018, (p.9 of the Australian Financial Review) Ben Potter reported the Queensland Renewable Energy Expert Panel (QREEP) found 'subsidies of up to $1 billion' (per annum?) would be needed to reach the Queensland Government's 50% renewable energy target by 2030. See also Mark Schleibs, Taxpayers in dark as they prop up solar, The Australian, 7 June 2018, p.7, on hidden Qld government solar subsidies.
Is this plausible? Queensland accounts for about 28% of NEM electricity consumption. Solar power dominates its renewables supply. Using table 2 above, (and assuming 28% of the solar subsidies therein), Queensland solar subsidies for reliability would be about $1.1 billion per annum if both fossil fuel and solar power costs $50/MWh. As fossil fuel costs rise, the QREEP 'up to $1 billion' subsidy estimate becomes more realistic. As solar costs rise above $50/MWh, it quickly becomes a very large cost under-estimate.
Suppose $/MWh generation costs for renewables match fossil fuels. Assuming all costs raise power prices, what cost increases result from switching from fossil fuels to wind or solar, with enough extra generation and storage capacity to make renewables 'reliable'? Intermittency increases capacity costs a lot – see chart.
- At a RET of 25%, 'reliable' solar power requires $/MWh power increases of over 40%. Zero for wind.
- A 50% RET requires 'reliable' wind and solar $/MWh increases of 40-50% and 70-80%, respectively.
- A 75% RET requires 'reliable' wind and solar $/MWh increases of 60-70% and 80-90%, respectively.
- A 100% RET requires 'reliable' wind and solar $/MWh increases of over 70-80% and 90-100%.
Should we be paying renewables protection money? Most politicians say 'yes'. Many want us to pay even more. How can costs for reliable power fall? When? Will politicians' repeated 'promises' about lower power bills be worth the media cost to broadcast them? Will any cuts be because of renewables, or despite them?
We've time to get answers, (if any). At the COAG meeting on 20 April 2018, all States, Territories, and the Commonwealth, kicked the National Energy 'Guarantee' (NE'G') can down the road (again) until August.
What are the flow-on costs and benefits of subsidised RETs, at present or in prospect? Costs for our economy's competitiveness, living standards, and government budgets are probably large and growing.
Can Australia's solid first-quarter economic growth this year be sustained? I doubt it.
And, despite these direct and flow-on costs, globally, the net emissions reduction benefits are zero at best.
Australian politicians are 'doubling down' on their energy cost gamble yet again. When their power cost gambling goes awry, punters pay. With power costs a crucial input, so, probably, will the entire economy.
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